Oil prices have surged following the United States’ announcement of sanctions on Russia’s largest oil producers. This move comes as President Donald Trump increases pressure on Vladimir Putin to negotiate an end to the conflict in Ukraine. Brent crude jumped as much as 2.9 per cent, exceeding $US64 a barrel, while West Texas Intermediate also rallied in response to the news. The US action blacklists state-run Rosneft and privately held Lukoil, citing Moscow’s insufficient commitment to peace in Ukraine.
These sanctions represent a shift in Trump’s stance, as he had previously indicated his intention to meet with Putin and expressed his belief that Russia was seeking to end the war. However, on Tuesday, Trump stated that he did not want a pointless meeting. In the wake of the sanctions, Trump announced plans to discuss China’s purchase of Russian oil with President Xi Jinping at an upcoming meeting in South Korea. He also mentioned that India’s Prime Minister Narendra Modi assured him that India would reduce its oil purchases from Russia.
Rosneft, led by Putin’s close associate Igor Sechin, and Lukoil are Russia’s two largest oil producers. Together, they account for approximately half of the nation’s total exports, which translates to around 2.2 million barrels per day in the first half of this year, according to Bloomberg estimates. Taxes derived from the oil and gas industries contribute approximately a quarter of Russia’s federal budget.
Rosneft is a state-controlled oil and gas company engaged in hydrocarbon exploration and production, while Lukoil is a privately owned multinational energy corporation. The sanctions aim to curtail Russia’s revenue streams from these key players in the oil sector, as the US seeks to exert greater influence over Russia’s actions in Ukraine.